Unilever and Sainsbury’s testing blockchain for supply chain data

Dec 21, 2017 - A coalition of tech start-ups is using blockchain to build a database of small tea farmers in Malawi to improve supply chain transparency. The tool, which is being piloted by both Unilever and Sainsbury’s as well as several international banks, uses a number of different technologies to gather and record standardised information on small farmers and producers, including quality and price.

Blockchain – a distributed ledger system – will be used as part of the system to make second and third tier supplier information traceable.

If successful the technology, which could reach up to 10,000 farmers in its pilot phase, could be used to make supply chains more transparent and easier to assess for risk, allowing banks to offer lower priced capital to more than 1.5bn small-scale agricultural producers worldwide.

“This innovative new technology will help us to increase sustainable sourcing, enhance the livelihoods of the smallholder farmers we work with around the world,” said Keith Weed, Unilever chief marketing officer and head of sustainability.

“We have an important role to play in providing healthy food from a healthy planet, and we’re proud to be working with industry leaders on new technologies to bring us closer to this goal.”

The oversight could also ensure better compliance with regulations, including the UK Modern Slavery Act and bribery laws, and could help certify sustainability credentials.

Marguerite Burghardt, head of the Trade Finance Competence Center at BNP Paribas, one of the banks involved in the pilot, said: “This technology has the real potential to help banks access more detailed and more reliable information about social and environmental impacts in a secure way, through the entire supply chain.

“This will enable financial institutions to broaden the scope of their financing offers and to propose financial incentives to their customer clients, based on their environmental and social standards.”

The banks Barclays and Standard Chartered and wood fibre company Sappi are also involved in the pilot.

The pilot programme will test whether different technologies, including blockchain, smart contracts and novel data services, can function together in a financially-viable way to provide firms with risk assessment data that is not available through existing systems.

A collective of tech start-ups have developed the technology behind the system being tested. They include Provenance, a firm that provides blockchain supply chain services, Halotrade, which uses smart contracts to convert supply chain data into preferential pricing terms, and Landmapp, which delivers land rights documents to rural communities.

Jessi Baker, founder of Provenance, said: “We aim to design and demonstrate the power of a collaborative ecosystem approach to tackling the [UN] Sustainable Development Goals, through linking preferential financing to verifiable sustainability claims and transparent supply chains.”

The firms were brought together by the University of Cambridge Institute for Sustainability Leadership and the project is being supported by the UK Department for International Development.